It’s been a busy month for policy at Governance Institute.
Update on appearance before Senate committee
As discussed in the August edition of Acting for You, Governance Institute appeared before the Senate Select Committee on Financial Technology and Regulatory Technology on 30 June 2020 and gave evidence on changes that should be made to the Corporations Act 2001 (Corporations Act) to bring it into the 21st century.
The Senate committee has now handed down its interim report.
The Senate committee has agreed with the points made by Governance Institute and has recommended to government that the Corporations Act be amended to:
- allow companies to decide the best format for holding their annual general meetings and other prescribed meetings (whether through virtual meetings, in-person meetings or hybrid meetings), while ensuring the needs of shareholders are taken into account
- enable companies to communicate with shareholders electronically by default, with shareholders retaining the right to request paper-based communications on an opt-in basis.
The Senate committee has also recommended that the Corporations Act and other relevant legislation and regulations be amended to allow for the electronic signature and execution of legal documents.
Governance Institute welcomes the report of the Senate committee and encourages the Government to make the changes necessary to bring the Corporations Act into the digital age.
The COVID-19 pandemic has had an enormous impact on the operations of charities and not-for-profits, including an increase in demand for services, a loss of volunteers and an increase in costs of operations.
The COVID-19 restrictions have also impacted the ability of charities to fundraise. Events that typically formed part of the calendar of fundraising for charities such as fun-runs, morning teas, cycling tours, trivia nights and fundraising dinners have been cancelled and charities have had to pivot, where they are able, to internet-based fundraising. COVID–19 has exposed many of the shortcomings of the current regulatory environment, particularly the inconsistent regulatory regimes across jurisdictions that create complexity and uncertainty for charities and are a significant source of regulatory burden and costs.
The Charitable Fundraising National Working Group, consisting of officials with responsibility for the regulation of charitable fundraising in each jurisdiction in Australia as well as the ACNC, has been established to examine possible approaches to reduce unnecessary burdens arising from the regulation of charitable fundraising across multiple jurisdictions by providing a model for mutual recognition of registration. Under the proposed model, a charity already registered with the ACNC would be deemed to hold a local fundraising authority in each participating state or territory.
Our submission on this proposed model was lodged on 17 September 2020.
We welcome the formation of the Charitable Fundraising National Working Group and its work aimed at reducing unnecessary burdens on charities as an important and long overdue step in the process of fundraising reform. We are pleased that the ACNC is taking a leading role in facilitating this initial valuable collaboration as part of its objective of promoting the reduction of unnecessary regulatory obligations on the charitable sector.
While we acknowledge the advantages of a single licensing system as a way of creating a one step-process (rather than requiring charities to apply for up to seven different fundraising licences), we query whether the proposed model will provide any real practical improvement for charities.
As currently drafted the model allows individual jurisdictions to impose additional requirements on charities. While applying for an authority to fundraise is an occasional process, the bulk of the regulatory burden lies with compliance with notification, auditing, reporting and other rules. By only dealing with the registration process, the model provides only a fraction of the benefits that are needed.
Additionally, the model does not deal with not-for-profit entities but is limited to charities registered with the ACNC.
Since 2016, Governance Institute as part of the #fixfundraising coalition, has been advocating for reform of the fundraising regulatory regime which can be achieved through three simple steps:
- minor amendments to the Australian Consumer Law (ACL) to ensure application to fundraising activities is clear and broad
- repeal of state-based fundraising laws
- working with other regulators (for example, state-based regulators and self-regulatory bodies) to improve fundraiser conduct (for example, door-knocking, telemarketing, excessive spending of funds on third party services)
which would create a nationally consistent regulatory system.
We have encouraged the working group to develop a road map to a nationally consistent framework on fundraiser conduct and a repeal of state-based laws. Importantly, we have recommended that the working group continue to work with the sector to fix fundraising reform in time for the Christmas giving period.
We will continue to update members on this important work of fixing not-for-profit fundraising.
Guidance ― holding a virtual AGM
Governance Institute and the Australasian Investor Relations Association with the assistance of the Business Law Section of the Law Council of Australia has issued guidance on how to hold a virtual AGM.
The guide provides key tips on how to hold a virtual meeting in line with the current legislative requirements and ASIC guidelines. The guidance has been informed by the experience of our members who had to rapidly adjust to the pandemic in the mini AGM season and hold virtual AGMs.
Some of the key tips included in the guidance are:
- Contact your registry and technology provider to discuss arrangements for your AGM. Your chair will want to be involved in the decisions on what technology to use and how the meeting will be conducted.
- Decide what experience you shareholders will have.
- Ahead of the AGM, hold rehearsals to test the technology that will be used to facilitate the meeting and confirm that the chair and key stakeholders are comfortable with it.
- It will need to be clearly stated in the notice of meeting that the meeting will be held online and there will be no physical meeting.
- Clear and simple communication with your shareholders on how they can participate in the AGM will be important.
- Encourage proxy voting for those shareholders who will not attend the virtual AGM.
Currently companies can hold an AGM using technology rather than face-to-face meetings as part of temporary measures introduced during COVID-19. These will be in effect up to and including 21 March 2021.
Governance through a crisis
Governance Institute of Australia and the Australian Institute of Company Directors have published a new report about the impact of COVID-19 on board practices and insights into the governance challenges in the current climate.
The Governance through a crisis: Learning from COVID-19 report includes insights from interviews with senior directors, survey responses and feedback from roundtables with governance and risk professionals.
The report covers:
- How boards have successfully adapted to virtual meetings, including AGMs
- The need for agile decision-making in a crisis
- The importance of contingency planning
- How technology can elevate stakeholder voices.
The report is freely available from our website here.
|Recent advocacy activity|
Guide released to help organisations navigate new world of virtual AGMs ― 14 September 2020.
AICD and Governance Institute launch new report ― Governance through a crisis ― 11 September 2020.
Proposed cross-border recognition model for charitable fundraisers ― 17 September 2020.
Protecting critical infrastructure and systems of national importance ― 16 September 2020.
Review of the ICGN Global Governance Principles ―9 September 2020.